Is hard disk mining a false proposition? Wanke Cloud mining farms have been shut down in large numbers

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In 2019, professional miners of Wanke Cloud closed their mines one after another.

As the price of the currency plummeted and the output was halved, the actual daily output of One Cloud has dropped from more than 100 yuan at its peak to less than 0.4 yuan. Its price has dropped from more than 2,000 yuan to 50 yuan.

In addition to OneCloud, a large number of hard disk mining projects have also become unpopular. IPFS, which is favored by the blockchain circle, has been plagued by "mining machine scams."

Is hard drive mining the future of the blockchain industry, or is it a false proposition that cannot be established at all?

01Mining shutdown

At the end of 2018, Lao Xie took on a new job - calling every customer and persuading them to take back the hosted Wanke Cloud mining machines.

Just half a year ago, he was still trying his best to win these hard-earned customers.

In the first half of 2018, a blockchain company he worked for launched the Wanke Cloud Mining Machine Hosting Project, and he was the person in charge of this project.

Wanke Cloud is a shared cloud computing product launched by Xunlei in the second half of 2017. Users can contribute their idle bandwidth and storage resources through Wanke Cloud and receive "Chaink" (formerly known as "Wanke Coin") as rewards.

Similar to Bitcoin mining, OneCloud has also spawned industries such as mining and hosting. Unlike Bitcoin, OneCloud mining relies more on network bandwidth than electricity. Therefore, most OneCloud mining farms are hidden in cities.

△Wanke Cloud Mine in an office building

"When we first launched the Wanke Cloud hosting business, our price was 60 yuan per month," said Lao Xie.

At its peak, the computer rooms managed by Lao Xie were spread across many locations across the country, hosting more than 50,000 OneCloud devices.

At its peak, One Cloud's daily revenue was over 100 yuan. In the hands of scalpers, the price of One Cloud hardware also soared to over 2,000 yuan. "When it was the most expensive, our transaction price was 2,700 yuan per unit," said Lao Xie.

"At that time, there was a big miner in Ningbo who had more than 300 Wanke Clouds," recalled Lao Xie. "We negotiated a price of more than 2,000 yuan per unit. The next day, we rushed over with hundreds of thousands of cash, fearing that they would be snatched away by others."

But he was turned down. "The miner's mother suddenly changed her mind and asked her son why he sold a machine that could earn tens of thousands of yuan a day to someone else."

A large number of players eager to enter the mining circle purchased OneCloud through various channels at that time. Blockchain investor Dou Guofeng was one of them.

He purchased tens of thousands of Wanke Clouds through various channels. After that, he partnered with others to establish a large Wanke Cloud mining farm in a southern city.

"One Cloud has very high requirements for the network," said Dou Guofeng. "In order to maximize mining revenue, we have equipped each One Cloud with independent commercial broadband. Each broadband has a fixed independent public network IP, and the upstream and downstream bandwidths are equal, so the cost is very high."

But the situation took a sharp turn for the worse. As the number of Wanke Clouds on the entire network gradually increased, the Chainlink output of a single Wanke Cloud began to decline continuously.

The Wanke Cloud miners pinned their hopes on the rise in the price of the currency. However, since hitting a high of nearly 10 yuan in November 2017, the price of Chainlink has continued to fall. As of October 2018, its price has been hovering above 1 yuan for a long time.

Wanke Cloud halved the production of Chainlink in October 2018. Many miners believe that the reduction in Chainlink production will lead to an increase in the price of the currency, just like the reduction in Bitcoin production. However, the price of Chainlink has not improved.

This caused the actual daily revenue of OneCloud to drop rapidly. "At the lowest point, the daily output was less than 40 cents," recalled Lao Xie. "Many hosting customers took back their machines before we could persuade them to quit."

Their hosting service fee had to be lowered, with the lowest charge being only 10 yuan per month. The computer room and network dedicated line purchased by the company for the hosting business were all charged on an annual basis, and the fees are still being deducted; while the customer hosting mining machines are charged on a monthly basis. After careful calculation, the company suffered heavy losses.

On the eve of the 2019 Spring Festival, Dou Guofeng closed the mine. He failed to make back his investment.

On some second-hand trading platforms, the price of a second-hand Wanke Cloud is only about 50 yuan. Most buyers choose to use it as a download machine.

"Can the mining function of Wanke Cloud be turned off? I don't want it to take up the Internet speed." Many players said.

02 False Proposition

Whether it is Lao Xie or Dou Guofeng, they can't hide their disappointment with Thunder when talking about OneCloud.

"As a listed company, Xunlei's ambition is definitely not just to sell a few million Wanke Cloud hardware units," Dou Guofeng said. "But now, Xunlei has made Wanke Cloud like this, which is really disappointing."

In his opinion, the fact that Xunlei does not open source the Wanke Cloud project, does not announce the Chainlink reward mechanism, and does not allow Chainlink to be listed on exchanges makes it difficult for miners to believe in the decentralized nature of Wanke Cloud.

But at the same time, Dou Guofeng also understands Xunlei's difficulties: "As a listed company, Xunlei is unable to make more radical attempts in the face of various regulations."

Wanke Cloud has been controversial since its inception.

Shortly after the launch of One Cloud, Xunlei’s internal financial business department issued a statement blasting One Cloud as a “fake blockchain,” triggering internal strife within Xunlei. Afterwards, the Internet Finance Association also criticized Xunlei for allegedly conducting a “disguised ICO” by selling One Cloud mining machines.

Faced with various pressures, Xunlei began to downplay the "currency attributes" of Wanke Cloud. The "Wanke Coin" produced by Wanke Cloud was renamed "Chaink", and the domestic version of the Chaink wallet even removed the transfer function.

Fu Minghui, a person close to Xunlei's marketing department, told a blockchain reporter that Xunlei began to adjust the marketing direction of OneCloud since the spring of 2018.

"Xunlei no longer emphasizes that OneCloud can 'mine' or 'make money', but instead promotes its data backup and download functions that are more suitable for home users. For this reason, OneCloud even invited Sora Aoi to be its product spokesperson."

△Sora Aoi serves as the leader of the "Player Group"

In September 2018, Xunlei announced that it would sell its Chainlink-related businesses to Newland Group, completely separating Xunlei from Chainlink. However, Fu Minghui revealed that after the Chainlink business was divested, Xunlei was still responsible for the marketing of Chainlink.

"Xunlei is very secretive about the 'currency attributes' of Chainlink." Fu Minghui said, "But apart from 'coin speculation', Chainlink does lack application scenarios."

He said that Xunlei advertised that Chaink can be exchanged for various commodities in the official mall, but in fact, the most practical membership services of various video websites in the Chaink mall have been out of stock for a long time, while the physical goods are filled with a large number of small appliances of unknown brands, and even stainless steel basins.

In the cryptocurrency circle, "changing for a stainless steel basin" is a common joke among players about the plummeting cryptocurrencies. In the Chainlink Mall, Chainlink can really "change for a stainless steel basin".

After the popularity of OneCloud, a large number of followers also entered the hard disk mining and router mining markets. Products from brands such as Baofeng, Phicomm, and Jingdou Cloud emerged in an endless stream, but now they are all declining without exception.

"These products do not have actual business support like Thunder, and are more likely to be just for fun," Dou Guofeng pointed out.

The decline of a series of hard disk mining products has caused many people to begin to reflect on whether "hard disk mining" is a false proposition.

OneCloud is backed by Xunlei's "Star Domain CDN", which pioneered the "shared CDN" model and built the "computer room" in the homes of ordinary users.

In the opinion of CDN practitioner Yang Chen, it is indeed profitable for home users to use idle bandwidth for mining, as the cost is close to zero. However, for professional miners to use OneCloud for mining, the hardware, bandwidth, and operation and maintenance costs are far less than those of professional large-scale servers, and the input-output ratio is completely unequal.

"In front of the large computer rooms built with professional servers by Alibaba Cloud and Tencent Cloud, OneCloud is like a Subor game console," said Yang Chen.

Lao Xie agrees with this view to a certain extent. After bidding farewell to OneCloud, Lao Xie's company decided to completely abandon hard disk mining and turn to the field of quantitative investment.

However, Dou Guofeng is still optimistic about the hard disk mining model.

"Yang Chen's views are based on the current business model. But I believe that in the future, everyone can become a network node. There will be more and more decentralized network services," he said.

03 IPFS Mystery

In Dou Guofeng's view, the currently popular IPFS will be the one that can carry the ambition of decentralized network in the future.

The full name of IPFS is "Interplanetary File System". It is a decentralized network underlying protocol that can break files into pieces and store them in a distributed manner on different network nodes.

When a user retrieves a file, all nodes will react at the same time and restore the fragmented file based on the pre-generated file hash value.

According to the goal of the IPFS team, IPFS will build an incentive layer called Filecoin on top of the IPFS protocol layer in the future - users who save files for the IPFS network can receive Filecoin tokens as rewards.

This means that IPFS can also give birth to a new mining industry like Bitcoin and OneCloud. Miners are beginning to get excited.

"IPFS mining machines do not require much electricity, but they require very high bandwidth." Lin Yang, head of an IPFS mining machine manufacturer, told a blockchain reporter, "In order to obtain better network quality, IPFS mining farms are mostly built in first-tier cities such as Shanghai, Guangzhou, and Shenzhen."

They sell two types of IPFS mining machines, one is a home version with 4 hard drive slots, which can also be used as a home NAS (network attached storage), priced at 2,999 yuan; the other is a professional version with 12 hard drive slots, suitable for mining in mines, priced at 6,599 yuan.

They also provide mining machine hosting services. In cities with good network quality such as Shanghai and Shenzhen, the hosting fee is 800 yuan per month per machine; in Foshan, Dongguan and other places, the hosting fee is 400 yuan per month per machine.

Chen Nan, a practitioner of IPFS computing power leasing, showed a product manual to a blockchain reporter. The product they sell is called "mining pool node".

Chen Nan said that his mining pool is similar to a data center, with 968 nodes in one mining pool and the annual rental of one node is 23,999 yuan. Users can get a share of the income by renting a node.

But neither Lin Yang nor Chen Nan gave the specific benefits of IPFS mining - Filecoin's main network has not yet been launched, and currently IPFS mining machines cannot mine Filecoin at all.

And scams about IPFS mining machines are emerging one after another.

During the Spring Festival, Mao Pu, a blockchain practitioner, attended a "mining machine training course" in his hometown of Henan. The "training teacher" said at the beginning that as long as you buy one of their "IPFS mining machines", you can become an agent and make more money.

"I've seen their mining machines, which have several terabytes of hard disks, and they only cost 16,000 yuan, which is shockingly high." Mao Pu discovered that this was a Ponzi scheme. The predecessor of this mining machine manufacturer was actually an instrument company.

He also found that most of the scammers under the banner of "IPFS mining machine" claimed that their mining machines had a unique "dual mining mechanism": they can mine an unknown new currency now, and mine Filecoin in the future.

The so-called "new currency" is a virtual currency. The shipper often cooperates with small exchanges to raise the price of the currency in the early stage to attract users to buy mining machines, and then dump the market in the later stage to achieve "double harvesting".

The chaos caused by IPFS mining machines has attracted the attention of Filecoin officials. In August 2018, the Filecoin community issued a statement saying that they have not yet announced the mining system requirements and recommended hardware configurations, and recommended miners not to purchase any "IPFS mining machines" at this stage.

But various scams have not yet ceased.

***

In order to better experience IPFS, Dou Guofeng rented a cloud server and acted as a data node of IPFS. He used IPFS to share many files with his friends.

"Now some IPFS enthusiasts have begun to spontaneously establish nodes. Although they do not have any income at present, they are almost entirely supported by faith," he said.

Hard disk mining derived from IPFS may become a new paradise for believers in decentralized networks.

*The interviewees in this article are all pseudonyms.